Car Sales are Up, Compared to What?

The media touted the 17 percent increase in January car sales compared to the level reported for January 2010. It is not clear that this implies a very good month, since sales were quite weak in January of last year. The 800,000 level of sales estimated for January is a decline of 17.5 percent from 970,000 average monthly sales for the fourth quarter of 2010. If this sales rate continues through February and March then car sales will be a major drag on GDP growth for the quarter.